StanChart backs top brass after reports of shareholder jitters

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Steve Slater and Aashika Jain London

Standard Chartered has rejected reports that it had stepped up succession plans for its chairman and chief executive, who are under growing pressure from shareholders after a troubled two years.

The board of the Asia-focused bank said yesterday that it was united behind chief executive Peter Sands and chairman Sir John Peace in restoring profitable growth.

“No succession planning is taking place as a result of recent investor pressure,” it said.

“The board wants to be absolutely clear that it is united in its support of Peter Sands and Sir John Peace, and the management team, in delivering the refreshed strategy, restoring the bank to profitable growth and delivering returns for our shareholders.”

The Financial Times said Peace was considering a succession plan that could see Sands replaced in the next year, citing three people familiar with the matter.

Shareholders and bank industry sources told Reuters there was growing pressure on management. One shareholder said he wanted Sands to go. Others said Sands had time to show a turnaround was on track this year, and there was unhappiness with Peace.

“The high water mark was the half-year results two years ago. Since then there’s been an endless stream of things going wrong,” said Chris Wheeler, an analyst at Mediobanca, saying Sands could face a tough 12 months as there was no obvious catalyst for improvement.

The shares were down 0.49 percent at 9.23am in London, bucking a 1.63 percent rise by the European bank index, and taking losses in the past 18 months to 28 percent.

Standard Chartered warned last month that profit this year would drop for a second year, after a decade of record earnings on the back of roaring Asian growth. The bank makes more than three-quarters of its profits in Asia, Africa and the Middle East and came through the 2008/09 financial crisis relatively unscathed.

A reversal in fortunes started in summer 2012 when it paid $667 million (about R7 billion) for breaching US sanctions on Iran. That was followed by problems in South Korea and India , a slowdown in Singapore and margin contraction in trade finance.

“Until two years ago he [Sands] did a good job with a good management team and a lot of stability. Now he’s being measured against that success, and once the downward spiral starts it’s difficult to turn it without dramatic change,” Wheeler said.

Sands, who has been at the helm for seven-and-a-half years, has restructured the bank to boost profitability but it has been unsettled by a raft of management changes, including the exit of Richard Meddings as finance director.

The most obvious internal successors to Sands were wholesale banking boss Mike Rees or Asia chief Jaspal Bindra, analysts said. Naguib Kheraj, the former Barclays finance chief who is a director, is seen as the most likely replacement for Peace.

The bank said yesterday that “robust and considered” succession plans for all senior leaders were in place and were discussed regularly with investors. That includes Singapore wealth fund Temasek, its biggest shareholder with 18 percent. A person familiar with Temasek said the fund encouraged strong succession planning at all its portfolio companies. – Reuters


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